India, other bilateral partners can use oil blocks reclaimed from Exxon

India or other bilateral partners interested in searching for and producing oil offshore may be able to do so at the portion of the prolific Stabroek Block that will be reclaimed from the ExxonMobil-led consortium, Vice President Dr. Bharrat Jagdeo said on Friday.

Guyana expects some 20 per cent of the Stabroek Block to be relinquished next year.

Esso Exploration and Production Guyana Limited (EEPGL), ExxonMobil’s local subsidiary and operator of the Stabroek Block, shares this oil-rich space with the Hess Corporation (30 per cent interest) and the China National Offshore Oil Corporation (25 per cent  interest).

And once that portion of the oil-rich area, where oil production has begun, is reclaimed, Dr. Jagdeo said it can be made available for bilateral engagements.

“…those areas would be available also for bilateral and possibly, if the bilateral agreements don’t yield the results – we hope they would yield – they will also be available for auction,” the Vice President told reporters on Friday.

He, however, added, “We have made no definitive decision on the 20 per cent relinquished that those would be all available for bilateral engagements or auctions.”

In addition to the relinquished area and the blocks up for auction, there are other available areas that can be awarded.

For months, Guyana’s government has been touting the possibility of awarding blocks directly to bilateral partners. India, Qatar, Kuwait, the United Kingdom and the United Arab Emirates (UAE) are among the countries that have expressed an interest in this arrangement.

Jagdeo, on Friday, said the government’s decision to award blocks directly would be based on mutual benefits and profit sharing.

While the government considers that, it is auctioning off some available oil blocks.

The bid round for 14 new oil blocks was launched last December and it is expected to close by April 2023. The Guyana Government hopes to award contracts by the end of May 2023.

The oil blocks on auction are for shallow and deep water areas.

There will be separate requirements for qualification to participate in deepwater versus shallow water blocks for tender with a higher bar set for deepwater areas. There will be a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks.

Guyana is also developing a new model Production Sharing Agreement (PSA)- or, simply, an oil contract ahead of the auction.

And Jagdeo said the direct award of blocks if done, will “complement” the auction.

Countries are, however, expected to make specific proposals for consideration.